Weekly RoundUp May 01, 2019

Financial Services Weekly News: OCC Proposes Revisions to Fiduciary Rules

Editor's Note

In This Issue. The Office of the Comptroller of the Currency (OCC) published an advance notice of proposed rulemaking inviting comment on possible revisions to the OCC’s fiduciary regulations, including a proposal to update the regulatory definition of “fiduciary capacity,” the Consumer Financial Protection Bureau (CFPB) is seeking feedback on certain changes to the Remittance Rule, and the OCC published a notice of proposed rulemaking on other real estate owned activities, proposing to clarify and streamline their regulations for national banks and to apply the regulatory framework to federal savings associations. These and other developments are discussed in more detail below.

Editor's Note

Regulatory Developments

OCC Proposes Rule Changes on Fiduciary Capacity and Nonfiduciary Custody Activities

On April 29, the OCC published an advance notice of proposed rulemaking (ANPR) inviting comment on possible revisions to the OCC’s fiduciary regulations, 12 CFR 9 and 150. Specifically, the ANPR requests comment on whether the OCC should update the regulatory definition of “fiduciary capacity” to make it more consistent with recent developments under state laws. The ANPR also requests comment on the potential addition of new provisions to OCC regulations to establish certain basic requirements for nonfiduciary custody activities of national banks, federal savings associations, and federal branches and agencies (collectively, banks), which are not currently addressed by specific OCC rules. The OCC believes that a nonfiduciary custody rule could eliminate any confusion that exists over a bank’s obligations with respect to custody arrangements; impose minimal new responsibilities on well-managed banks, as the OCC would be codifying the OCC’s guidance on custody service activities for banks; and complement regulations related to the custody of client assets issued by the Securities and Exchange Commission, Commodity Futures Trading Commission, Internal Revenue Service, various states, the United Kingdom, and the European Union. The ANPR has a 60-day comment period, ending on June 28, 2019.

CFPB Issues Request for Information on Remittance Rule

On April 25, the CFPB issued a request for information (RFI) on its Remittance Rule. The RFI includes a consideration of issues discussed in the CFPB’s assessment of the rule, which examined if the rule had been effective in achieving its goals. The Remittance Rule imposes requirements on companies that send international money transfers, or remittance transfers, on behalf of consumers. Among its requirements, the rule mandates that providers generally must disclose the exact exchange rate, the amount of certain fees, and the amount expected to be delivered to the recipient. The CFPB is requesting information:

  • To determine whether to propose changing the remittance transfer providers the rule covers. Specifically, the CFPB is seeking information about the number of remittance transfers a provider must make to provide them in the normal course of business, and information on incorporating a small financial institution exception into the rule; and
  • About the expiration of a temporary exception in the rule that allows certain insured institutions to estimate the exchange rate and certain fees they are required to disclose when sending remittance transfers. The statutory provision authorizing the temporary exception expressly limits its length and does not provide the CFPB the authority to extend the exception beyond July 21, 2020. The CFPB will use the information in determining potential next steps, including considerations related to the expiration of the temporary exception.  

The public will have 60 days to comment after the RFI is published in the Federal Register.

OCC Proposes to Amend OREO Rules

On April 24, the OCC published a notice of proposed rulemaking on other real estate owned (OREO) activities. The purpose of the OCC’s proposal is to clarify and streamline their regulations for national banks and to apply the regulatory framework to federal savings associations. In addition, the proposed rule includes technical amendments to outdated capital rules, including OREO provisions. Prior to this proposal, the last significant revision to OREO rules was in 1996. Comments on the proposed rule are due by June 24, 2019.

Goodwin Alert: Cuba Sanctions Broadened to Target Investors and Travelers

On May 2, the Trump administration will authorize federal lawsuits against persons “trafficking” in property expropriated from U.S. ownership by the Cuban government from the 1959 Cuban revolution onward and may also bar such persons and others affiliated with them from entry to the United States. Also expected is a strengthening of the primary U.S. sanctions against Cuba, including for personal remittances to Cuba, certain “U-turn” banking transactions, and U.S.-person travel. For more information, read the client alert issued by Goodwin’s Global Trade practice.

Goodwin Alert: Time-Sensitive Action Items Under the Massachusetts Paid Family and Medical Leave Law

The recently enacted Massachusetts Paid Family and Medical Leave (PFML) law is game-changing legislation. For employers that are subject to the requirements of the federal Family and Medical Leave Act (FMLA), some of the PFML concepts will be familiar. But the PFML is broader in scope, particularly with respect to eligibility, and it applies to all Massachusetts employers regardless of size. Although employees will not be entitled to take leave under the PFML law until January 1, 2021, employers face upcoming deadlines of May 31, 2019, to provide written notice to their current workforce, and July 1, 2019, to comply with certain other key aspects of the PFML law. Employers should consult with employment counsel to assess various approaches to satisfying these obligations. For more information, read the client alert issued by Goodwin’s Employment practice.

Enforcement & Litigation

Maryland AG Announces Settlement with Reverse Mortgage Servicer

On April 16, the Maryland Attorney General, in cooperation with Maryland’s Office of the Commissioner of Financial Regulation, announced a settlement with a Michigan reverse mortgage servicer resolving allegations that the company charged homeowners for home inspection fees in violation of the Maryland Consumer Protection Act, Md. Code Ann., Com. Law §§ 12-121 and 12-1027. Read the Enforcement Watch blog post.

Goodwin News

ICI General Membership Meeting + Legal Forum — May 1-3

Join the global fund industry for the Investment Company Institute’s 61st annual General Membership Meeting (GMM) at the Marriott Wardman Park Hotel from Wednesday, May 1, to Friday, May 3. This premier conference event will feature fund industry and business leaders exploring the key issues shaping the future of the investment company industry. Goodwin is a sponsor and speaker at the Legal Forum, which is held in conjunction with the conference. Paul Delligatti, Mike Isenman and Nicole Griffin will present on Developments in Recent Fee Litigation, Takeaways for Fund Boards and What’s Next? on Thursday, May 2. For more information, click here.

NJBA 115th Annual Conference — May 1-5

The New Jersey Bankers Association is hosting its 115th Annual Conference in Colorado Springs this year. For more information, click here.

Consero 2019 Corporate Litigation Forum For Financial Services & Insurance — May 5-7

Consero's 2019 Financial Services & Insurance Litigation Forum will address making the most of the inside-outside counsel partnership, how to anticipate, investigate, and litigate a data breach in 2019, strategies for managing an increased litigation workload while staying on budget, and corporate internal investigations: best practices and pitfalls. Brenda Sharton, Financial Industry partner in Boston, will be speaking on cybersecurity at the conference. Visit the event website.

Mortgage Bankers Association Legal Issues And Regulatory Compliance Conference 2019 — May 5-8

The Mortgage Bankers Association’s Legal Issues and Regulatory Compliance Conference gathers industry leaders to consider best practices, organizational changes needed to assimilate to final rules, and knowledge to educate staff. Goodwin is a sponsor of this year's event.

David Permut, partner in Goodwin's Financial Industry and Consumer Financial Services Litigation practices, and Levi Swank, associate in the firm's Financial Industry and Consumer Financial Services Litigation practices, will speak on the Developments in Administrative Law Litigation forum on  May 5. Matt Sheldon, partner in Goodwin's Financial Industry and Consumer Financial Services Litigation practices, will speak on the Alternative Home Lending Models Emerging Issues track on May 5. Tony Alexis, partner in Goodwin's Financial Industry practice and head of the firm's Consumer Financial Services Enforcement practice, will speak on the UDAAP Compliance panel on May 6. Tom Hefferon, partner in Goodwin's Financial Industry and Consumer Financial Services Litigation practices, will speak on the Litigation Challenges Facing the Industry Regulatory Developments track on May 7. For more information, please visit the event website.

Pennsylvania Bankers Association Annual Convention — May 15-18

Experience three days packed with dynamic speakers and lively discussions about the banking industry, and an inspirational program at the Pennsylvania Bankers Association Annual Convention. Goodwin will sponsor this event. For more information, please visit the event website.

This week’s Roundup contributors: Christina Hennecken, Timothy Holahan, William McCurdy, and Justin Pierce.